New finance chief pledges fiscal discipline

Johannesburg - South African Finance Minister Nhlanhla Nene, who was sworn into office today to replace Pravin Gordhan, pledged to follow his predecessor in bringing down the budget deficit.

The National Treasury has a clear, three-year fiscal framework in place, Nene, 55, said in an interview yesterday in the capital, Pretoria.

In the five years that Nene was deputy finance minister, the government committed to bringing the budget deficit down to below 3 percent of gross domestic product by curbing spending and spurring economic growth.

Policy in President Jacob Zuma’s final term is focused on the 20-year National Development Plan that seeks to cut the jobless rate to 14 percent by 2020 from 25 percent currently.

“Investors know, they have seen all our documents, they’ve seen our medium-term policy framework, they’ve also seen our National Development Plan, which is our blueprint,” Nene said.

“We’ve set a clear fiscal framework, so fiscal discipline is on the cards. What we want to do is grow the economy. When it grows, we will be able to spend more.”

The economy has come under strain this year as a four-month strike in the platinum industry curbs output.

The government is concerned by the impact of the stoppage, which isn’t in the interest of workers or the industry, Nene told reporters in Pretoria yesterday.

Government data today will probably show the economy contracted for the first time since a 2009 recession, with output dropping an annualised 0.2 percent in the first quarter compared with the previous three months, according to the median estimate of 22 economists surveyed by Bloomberg.

The rand fell for a second day to 10.3640 against the dollar as of 8:36 a.m. in Johannesburg. - Bloomberg News

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